Weekly Report - 10 February 2004

INDUSTRY | Recovery lagging behind other sectors. Mexico's manufacturing industry has not been the first to respond to improved economic conditions in the US — indeed, according to Yeidckol Polenvsky, president of Canacintra, the association of manufacturers, it was the last. Taken as a whole, he says, the manufacturing sector has not yet experienced a recovery. Two subsectors, he says, have been stimulated by the upturn in the US: the auto industry and the maquiladoras (assembly plants). `However,' he adds, `we have many sectors of industry that are not integrated into the export industry, and require not only reactivation abroad but also on the domestic market.'

INVESTMENT | Losing out to competitors. Mexico is losing its edge as an attractive centre for regional operations, and will continue to do so unless reforms are implemented in areas such as energy, taxation and labour legislation. The verdict comes in a study by the leading private-sector think-tank, Ceesp. It says that investors are turning elsewhere because `the cost of establishing themselves [in Mexico] is increasingly higher, as profitability in other geographic areas has been rising.' The winners in this contest, says Ceesp, have been countries like Brazil, Russia, China and India. Mexico, it says, `has not qualified satisfactorily in [several international indicators] such as competitiveness, corruption and regulation.'

BANKING | Joining the Central Americans. Mexican banks are reportedly about to join an initiative launched last November in Central America: the Alianza Bancaria Internacional (ABI). Encouraged by the rapid growth of remittances by expatriates, ABI provides a regionwide network of more than 700 agencies of seven banks which honour each other's cheques and allow their clients to withdraw funds in either their own currencies or US dollars. Apart from Mexican banks, institutions from the US and the Dominican Republic are also said to be weighing the benefits of joining.